Indian textile exports can hit US$65 billion if industry majors take the right steps and there is proper execution of government schemes, a joint report by global consulting firm Kearney and The Confederation of Indian Industry (CII) said. Exports declined by 3 per cent during 2015–2019 and by 18.7 percent in 2020, the report observed and went on to add that during the same period, other low-cost countries such as Bangladesh and Vietnam have gained share.
“We believe with the right actions from the industry majors and robust execution of government schemes, India can hit $65 billion in exports (implying 9-10% CAGR) by 2026. This, coupled with growth in domestic consumption, could propel domestic production to reach $160 billion. Given the labour-intensive nature of this industry, this growth could add 7.5 million direct jobs in textile manufacturing, Kearney said in a statement.
The report said a variety of factors have contributed to India’s recent trade performance. India has factor cost disadvantages (example, power costs 30 to 40 percent more in India than it does in Bangladesh). Lack of free or preferential trade agreements with key importers, such as the European Union, United Kingdom, and Canada for apparel as well as Bangladesh for fabrics also puts pricing pressure on exporters.
“The high cost of capital and high reliance on imports for almost all textiles machinery makes it difficult to earn the right return on invested capital, especially given India’s slight cost disadvantage. Longer lead times than for Chinese manufacturers make India uncompetitive, especially in the fashion segment. For example, India’s lead time is 15 to 25 percent longer than the competition in fabrics. Limited presence in the global trade of man-made fibre products.